MediPharm Labs Acquires VIVO Cannabis in All-Equity Deal, Creating Global Medical Cannabis Leader

LOS ANGELES–MediPharm Labs and VIVO Cannabis Inc have announced the completion of a plan of arrangement that will result in MediPharm acquiring all the issued and outstanding common shares of VIVO. This all-equity business combination transaction took effect on April 1, 2023. The arrangement combines two businesses that complement each other, establishing an international medical cannabis leader that differentiates itself from the market. The acquisition of VIVO by MediPharm will bring established Australian and German medical cannabis brand Beacon Medical, a prominent medical cannabis clinic business Harvest Medicine, and a Canadian medical sales platform Canna Farms Medical to the table. Canna Farms was the first licensed producer in British Columbia, and its medical sales channel, Canna Farms Medical, has supported over 60,000 patients since 2014. Direct-to-patient sales usually have better gross margins, and it is expected that the platform will provide patients with a more diverse product portfolio, including MediPharm products. After the arrangement, VIVO’s clinic business, Harvest Medicine, will offer real-time product feedback and clinical insights on MediPharm’s products. The combined company is expected to provide extensive Canadian market coverage with cultivation and manufacturing expertise and a complete range of dried flower and derivative products with established medical and adult-use wellness distribution channels. The pro-forma combined company will cover European and Asia-Pacific markets through established, revenue-generating agreements. The acquisition will result in positive EBITDA and cash flow in the first half of 2024, with forecasted positive EBITDA synergies to the magnitude of between $7M to $9M on an annualized basis. The pro-forma combined company is expected to have annualized international revenue of over $20M, representing approximately 40% of total revenues. The balance sheet strength of the Combined Company is expected to provide confidence to execute on its strategic growth roadmap, despite the macro backdrop of capital markets that continue to soften. The Combined Company is owned approximately 73.1% by former MediPharm shareholders and approximately 26.9% by former VIVO shareholders. As a result of the arrangement, VIVO became a wholly-owned subsidiary of MediPharm, and the VIVO Shares are anticipated to be delisted from the Toronto Stock Exchange on or about April 4, 2023.